China's economic growth has remained respectable amid a difficult global environment, but it is still too early to say if the economy has really bottomed out, according to Louis Kuijs, senior economist, World Bank.
Kuijs noted that given the subdued prospects for the world economy, "more data is needed" to prove that China's current economic recovery is for real.
"With world demand weak and a lot of spare capacity available globally and also in China, there is a lot of downward pressure on manufacturing output," he told the spring membership meeting of the Institute of International Finance in Beijing on Wednesday.
China's economic growth hit a 10-year low of 6.1 percent in the first quarter, while the export sector, the key engine for economic growth, has not shown much signs of stabilization after slumping by 20.5 percent in the first four months. These could shave off two or even more percentage points of China's GDP growth, said Kuijs. China's growth is hardly different from the world, he said, given that the country's economy is more integrated into the world economy than many other major emerging markets.
Kuijs said fiscal stimulus has been essential for keeping China's economy going, prompting a mixed picture that investment in manufacturing and other market-based sectors were still weak, while public investment has been instrumental in shoring up the economy.
Government influenced spending accounts for one-third of the country's total domestic demand, he said.
With the help of soaring fiscal outlays and accommodative monetary policies, Kuijs said the country has managed to achieve an amazing 6-7 percent growth so far, but the medium term economic prospects would be weaker than in the previous five to ten years.
"The prospects for the coming year or so are that growth will remain respectable but is unlikely to rebound to the very high single-digit rates of growth that China has been used to unless the world economy recovers," he said.
Kuijs said China's export growth in volume terms in the coming 10 years is likely to fall to about half of what it has been in the previous 10 years.
The World Bank had estimated in March that China's economic growth this year would be around 6.5 percent, while the world economy is expected to shrink by 1.5 percent this year. The bank will release its quarterly economic update on China next Thursday.
(China Daily June 12, 2009)
